Qui Tam Teamhttp://www.quitamteam.com
Join in the Fight Against FraudWed, 19 Nov 2014 21:39:26 +0000en-UShourly1https://wordpress.org/?v=4.9.4Straight to the SEC: Trouble for the Future?http://www.quitamteam.com/straight-sec-trouble-future/
http://www.quitamteam.com/straight-sec-trouble-future/#respondFri, 06 Dec 2013 21:32:51 +0000http://www.quitamteam.com/?p=984Strict Standards: Declaration of C_DataMapper_Driver_Base::define() should be compatible with C_Component::define($context = false) in /nfs/c06/h01/mnt/156219/domains/quitamteam.com/html/wp-content/plugins/nextgen-gallery/products/photocrati_nextgen/modules/datamapper/class.datamapper_driver_base.php on line 0

by Edward Kang and Michael Chiumento, Clerk In a startling settlement that has businesses nationwide scratching their heads and trembling in fear, the SEC’s recent $14 million award to a whistleblowing employee has been found to have been given to someone who did not first report to the company’s own human resources department with the problem. While whistleblower protection statues do not require that employees first go through human resources with potential issues, it has […]

In a startling settlement that has businesses nationwide scratching their heads and trembling in fear, the SEC’s recent $14 million award to a whistleblowing employee has been found to have been given to someone who did not first report to the company’s own human resources department with the problem. While whistleblower protection statues do not require that employees first go through human resources with potential issues, it has long been understood that the first step in the process of reporting a potentially illegal activity was to try to work within the company, only going outside if necessary. Traditionally, and under Dodd-Frank, potential whistleblowers also see their rewards rise if they report internally first. Reports state that it only took the SEC about six months form the time of the original “tip” to enforce the penalties upon the accused company. It would seem that the SEC actually rewarded the whistleblower here for going straight to the SEC and bypassing the longer internal process, which may have failed to yield similar results.

This troubling development raises some serious questions as employers begin to wonder whether this process is valid and helpful, or just a waste of time. Internal investigative procedures are normally in place in order to sift through the claims made by employees regularly to ensure that one is valid before passing it on to the SEC if necessary. The thought then becomes that if employees see that they can gain such large sums in reward money, they may be more inclined to go straight to the SEC with many more claims. But considering how many claims that are made internally to companies end up being invalid, there is a worry that unfiltered claims will make their way to the SEC more often.

Human resource department are in place specifically to address issues such as these that arise and often understand the dynamic of the company better than outside sources. As a result, there is the belief in the corporate world that HR department should be allowed time to collect evidence and interview employees before the SEC takes over an investigation for the benefit of the process as a whole. The fact that the SEC was willing to reward the largest sum in the history of Dodd-Frank to a whistleblower that bypassed reporting internally first, raises the question about the future of whistleblowers in general. Clearly in this case, the whistleblower was not penalized in any way for going straight to the SEC, which influences future whistleblowers in an unsettling way. Experts continue to stress in the modern day under still new whistleblower protections and incentives set by Dodd-Frank, for companies to improve and educate the internal complaint reporting systems in place. All employees at any level should be made knowledgeable of how to report any internal issues or complaints so that they feel it to be a quick and simple process to keep issues in house when possible.

]]>http://www.quitamteam.com/straight-sec-trouble-future/feed/0Educating the Potential Whistleblowerhttp://www.quitamteam.com/educating-potential-whistleblower/
http://www.quitamteam.com/educating-potential-whistleblower/#respondFri, 06 Dec 2013 21:21:21 +0000http://www.quitamteam.com/?p=977by Edward Kang and Michael Chiumento, Clerk This past September marked the third year of the Government Accountability Project’s “American Whistleblower Tour: Essential Voices for Accountability,” a traveling tour aimed at college students about to enter the business world with regards to whistleblowing. The traveling educational panel consists of Jack Spadaro, a whistleblower in the mining industry who went public with information about Massey Energy after a spill in 2000, and Wilma Subra, who blew […]

This past September marked the third year of the Government Accountability Project’s “American Whistleblower Tour: Essential Voices for Accountability,” a traveling tour aimed at college students about to enter the business world with regards to whistleblowing. The traveling educational panel consists of Jack Spadaro, a whistleblower in the mining industry who went public with information about Massey Energy after a spill in 2000, and Wilma Subra, who blew the whistle on health regulations for clean up workers after the British Petroleum oil spill in 201, among others. In the past, the tour has included such famed whistleblowers as Daniel Ellsberg who blew the whistle on the Pentagon Papers and Sherron Watkins who was involved with Enron. The tour has been met with immense positivity as it seeks to educate college students about the ethical necessity for whistleblowing practices as well as the potential reward for making the moral decision to blow on the whistle on illegal activity.

The president of the Government Accountability Project, Louis Clark, has been advocating on behalf of whistleblowers since 1978 and is seen as a leading expert in the field. His expertise is put to use on the tour in order to erase the negative connotations which have in the past, sometimes been attributed to the practice of blowing the whistle. His lengthy term of experience in the field has made him key to educating America’s future business people on resources available to them if they find themselves in a situation that may involve illegal covered up activity. Furthermore, in the current day and age when whistleblower laws continue to change and strengthen thanks to Dodd-Frank as well as Sarbanes-Oxley, it is vital to ensure that those entering the workplace are up to date on the many protections available to them that years ago were not available. All in all, the tour has stopped at 24 schools nationwide including the University of Nebraska, Rutgers University, Syracuse University, Auburn University as well as many others. The current leg of the tour started on September 18 at West Virginia University and will visit many more schools through the next few months with its current lineup of guests.

]]>http://www.quitamteam.com/educating-potential-whistleblower/feed/0Sarbanes-Oxley and Dodd-Frank Doing their Jobhttp://www.quitamteam.com/sarbanes-oxley-dodd-frank-job/
http://www.quitamteam.com/sarbanes-oxley-dodd-frank-job/#respondFri, 06 Dec 2013 21:16:31 +0000http://www.quitamteam.com/?p=974The goals of two pieces of legislation passed within the past decade that included new whistleblower protection standards seem to be accomplishing their goals in sending a message to companies nationwide. No longer does it seem that insiders feel threatened to make the ethical decision to disclose potentially illegal activity to the federal government or appropriate institutions. Recent settlements have also indicated that doing moral good can also lead to quite a good financial ending […]

]]>The goals of two pieces of legislation passed within the past decade that included new whistleblower protection standards seem to be accomplishing their goals in sending a message to companies nationwide. No longer does it seem that insiders feel threatened to make the ethical decision to disclose potentially illegal activity to the federal government or appropriate institutions. Recent settlements have also indicated that doing moral good can also lead to quite a good financial ending as well, providing even more incentive for blowing the whistle.

April, 2010 Complaint Filed

An April, 2010 complaint filed with The Occupational Safety and Health Administration (OSHA) by the former CFO of Clean Diesel Technologies Inc. has resulted in a $1.9 million payment by the company to its former employee after he blew the whistle on illegal activity surrounding a potential company merger. The CFO believed that a conflict of interest existed involving the chair of the company’s board of directors that violated internal company controls mandated by the SEC. It was found on September 30, 2013 by OSHA that the complaint filed by the CFO was correct and the company therefore was ordered to pay him roughly $1.9 million for lost wages, bonuses, stock options, severance pay, compensatory damages for pain and suffering, damage to career and professional reputation, as well as lost 401(k) employer matches and expenses. To further expand upon the defense of the whistleblower, OSHA ordered the company to rid its system of all file related to disciplinary action against its former CFO.

While this exists as one specific example held under Sarbanes-Oxley, the SEC also recently announced on October 4, 2013 that it had awarded its largest “bounty” under Dodd-Frank since the bill’s inception. An unidentified whistleblower was granted a $14 million bounty under Dodd-Frank, making it the third award of over $25,000 but by far the biggest to date. This award as well as the one under Sarbanes-Oxley in the Clean Diesel Technologies Inc. case have sent a strong message to companies and employers nationwide. In changing times that find whistleblower gaining both increased protection in the workplace as well as more incentive to report misdoings, employers must strive to strengthen their internal reporting measures. One way of doing so being employed at many companies is to create an internal reward system similar to the one in Dodd-Frank in which whistleblowers are rewarded for reporting violations internally so that the company can address them from within. The overall takeaway from cases such as these seem to “send a clear message to publicly traded companies that silencing those who try to do the right thing is unacceptable,” as said by Dr. David Michaels, the Assistant Secretary of Labor for OSHA.

]]>http://www.quitamteam.com/sarbanes-oxley-dodd-frank-job/feed/0Student loan borrowers flood government website with complaintshttp://www.quitamteam.com/student-loan-borrowers-flood-government-website-with-complaints/
http://www.quitamteam.com/student-loan-borrowers-flood-government-website-with-complaints/#respondFri, 24 Aug 2012 13:37:51 +0000http://webesco.net/quitamteam/?p=399Graduates of Emory’s School of Theology in May 2011. (David Goldman/AP) Thousands of student loan borrowers wrote occasionally heartbreaking complaints about dealing with their debt burden to the federal Consumer Financial Protection Bureau, which is soliciting comments from people who have taken out private student loans to finance their education. “My own children will not be able to get the help they need to go to college because I will STILL be shackled to my […]

Graduates of Emory’s School of Theology in May 2011. (David Goldman/AP)

Thousands of student loan borrowers wrote occasionally heartbreaking complaints about dealing with their debt burden to the federal Consumer Financial Protection Bureau, which is soliciting comments from people who have taken out private student loans to finance their education.

“My own children will not be able to get the help they need to go to college because I will STILL be shackled to my debt,” one woman wrote.

“I want to work hard, marry my girlfriend, buy a house, and start a family. I am barely treading water right now,” a young lawyer said of his $130,000 loan burden.

The consumer protection group asked the public for responses to help the Department of Education conduct a study on the private student loan market, and it published nearly 2,000 comments and complaints on its website. The group also released a student loan complaint system, where borrowers can report their grievances.

Private student loans often have higher interest rates than public ones and do not always offer income-based repayment plans for borrowers who get into financial trouble. Neither type of loan can be discharged in bankruptcy.

Many of the commenters say they are unable to pay their student loans or their children’s loans, and some complained that the loan companies have aggressively gone after their cash, driving them into poverty. Some borrowers wrote that they regret going to college altogether, or that they were uninformed about how quickly the debt would balloon. Many mentioned that they are unable to consolidate their various loans into one, lower-interest loan. A few people, however, wrote in to defend private loans, saying they had no difficulty paying them off.

Read some of the comments—spelling and grammar unchanged from the originals—below:

When I left my job in 2007 to remarry late in my 40’s, I had no idea that it would be so difficult finding a new job. My youngest son (17) has Autism Spectrum Disorder. Each year at tax time I receive the child tax credit. Recently, our taxes have been intercepted due to my stepdaughter’s PLUS loan which was taken by my husband before we were ever married. They laugh at me when I tell them how needed that child tax credit is for our family of five, making just over $45k per year. Are they allowed to take my tax credit when I had nothing to do with taking the PLUS loan?

As a single mother, I put off getting my degree until my children were raised. I obtained my Bachelor’s degree Summa Cum Laude. Since then, I make 25% less money than when I had no degree. I cannot afford to pay. The collection agency said it doesn’t matter if I can’t afford to pay. They will take the money from my bank accounts, retirement, and social security until it is paid in full. I do not make enough money now to feed myself and pay rent. PLEASE HELP.

I am writing to simply share my story in hopes that others will have more information when making the decision to pursue post-graduate education by taking out massive educational loans. I spent three years in law school and borrowed approximately $130,000 to pay for tuition and living costs in San Francisco. To pursue a law degree, I had no other option to fund my education – both my parents being disabled. Currently, my financial situation is abysmal, and frankly it is quite depressing to even think about. I have been practicing law for well over a year now, however earning annually only about $70K, which is the median for graduates in my position. I pay $800 in interest each month, which is more than my rent. Note: that is interest alone. I attempt to make payments towards my principal too, however it is grim. In over a year and a half of working and making dutiful payments, I have whittled my previous balance down to about $120,000. In 2011 alone, I have paid a total of about $16K in interest. That is clearly not progress. (Sidenote: After the economic crisis caused by the banks in 2009, why are they still profiting at the the expense of honest people’s livelihood?) I’m not quite sure what other people’s experience is, but this doesn’t feel like what I signed up for. Part of the problem is that I anticipated earning $120K-$160K upon graduating from law school, but that is another story. No matter how hard I work, I am unable to save money to fulfill those dreams that truly make life meaningful. I want to work hard, marry my girlfriend, buy a house, and start a family. I am barely treading water right now. It is ironic because, as the first attorney in my immigrant family, we were all elated — I even thought that the age-old American Dream would unfold for me. None of us realized the full financial extent of my education. We were only overjoyed that I would have the opportunity to become an attorney.

I am a mother of 2 children with student loans. My son is 26 and has completed his education online with 2 different colleges. He has about $52,000 in loan money and a degree in forensic science in computers and teaching but is working as security for a carbon company and a second job in an auto parts company just to start making payments on his loan which will take him 30 years to pay off. He has tried to consolidate all his bills but they refuse to give him a low rate of interest on them. My daughter has about $22,000 in loans, didn’t finish her degree online in web graphic design and has no work. My ex husband thinks they double billed the amount as it seems strange that 2 different organizations she owes the same amount. My ex co-signed the first loan so he is paying on this loan and he is on disablilty and the second loan they told us we have to make 6 payments and then she can re-apply for yet another loan as she would like to change fields and study to be a veteranian assistant. Both loans she has now are not low interest and my husband who is retired from the UK and living legally with me in this country (Im not working) cannot afford this but were told that if she finds work they will go after her earnings. She has no car, no drivers license (she is 22) and can’t get a job without a car. It’s like both are trying to do something with their lives but can’t.

I paid $500 a month for 8 years on my student loans, which repaid the principal that I borrowed. Then my spouse fell into drugs and I had to file chapter 7 bankruptcy, and I wound up getting divorced for fear for my life. I have , for the last 8 years, had financial hardship as a single parent of 2 children who gets no spousal support or child support. I work full time as an art teacher in a public school. I will not be able to retire until 25 years has passed since I refinanced my student loans- and because I supposedly “make too much”, I am unable to get a deferment for financial hardship- which means my loans continue to accrue interest. My total student loan amount I borrowed was about $55,000– and thanks to capitalized interest, I now owe in excess of $130,000. The education I signed in blood for is going to keep me enslaved until I am at least 68 years old. People who are public school teachers, medical professionals, or social workers should have their loans completely forgiven after ten years. My own children will not be able to get the help they need to go to college because I will STILL be shackled to my debt. It is predatory, and I grew up poor- so there was no other way but to sign in blood with good intentions. You need to loans so you can afford the education- but you are enslaved for the rest of your adult life. How does this make anything better for future generations?

]]>http://www.quitamteam.com/student-loan-borrowers-flood-government-website-with-complaints/feed/0Federal Consumer Loan Watchdog Investigates For-Profit Collegeshttp://www.quitamteam.com/federal-consumer-loan-watchdog-investigates-for-profit-colleges/
http://www.quitamteam.com/federal-consumer-loan-watchdog-investigates-for-profit-colleges/#respondFri, 10 Aug 2012 18:23:34 +0000http://webesco.net/quitamteam/?p=398May 22, 2012 By Goldie Blumenstyk The new federal Consumer Financial Protection Bureau is investigating ITT Educational Services about the for-profit-college company’s student-loan practices, ITT disclosed on Tuesday in a filing with the Securities and Exchange Commission. In its demand for documents and other information from the company, the bureau said the investigation was part of a broader inquiry “to determine whether for-profit post-secondary companies, student-loan origination and servicing providers, or other unnamed persons have […]

The new federal Consumer Financial Protection Bureau is investigating ITT Educational Services about the for-profit-college company’s student-loan practices, ITT disclosed on Tuesday in a filing with the Securities and Exchange Commission.

In its demand for documents and other information from the company, the bureau said the investigation was part of a broader inquiry “to determine whether for-profit post-secondary companies, student-loan origination and servicing providers, or other unnamed persons have engaged or are engaging in unlawful acts or practices relating to the advertising, marketing, or origination of private student loans.”

Earlier this month, another giant for-profit-college company, Corinthian Colleges Inc., disclosed that it too was being investigated by the bureau, and had also been served with a civil subpoena demanding documents and other information about its loan practices and other company matters.

Both college companies operate private-student-loan programs in conjunction with outside entities, and in their filings each said that their programs did not violate any laws.

In November a key official with the bureau said the private-student-loan business “has been operating in the shadows for too long,” and the bureau has invited students, colleges, and lenders to suggest ways to better regulate the loans.

]]>http://www.quitamteam.com/federal-consumer-loan-watchdog-investigates-for-profit-colleges/feed/0America’s Worst Collegeshttp://www.quitamteam.com/how-badly-are-for-profit-schools-serving-young-people-corinthian-colleges-embodies-the-industrys-worst-trends/
http://www.quitamteam.com/how-badly-are-for-profit-schools-serving-young-people-corinthian-colleges-embodies-the-industrys-worst-trends/#respondFri, 10 Aug 2012 17:53:08 +0000http://webesco.net/quitamteam/?p=397How badly are for-profit schools serving young people? Corinthian Colleges embodies the industry’s worst trends BY ANDREW LEONARD TOPICS: EDITOR’S PICKS, EDUCATION, STUDENT LOAN DEBT In the fall of 2010, three former students at Everest College, a for‐profit career school in Salt Lake City, sued their school’s parent company, Corinthian Colleges, alleging that admissions officers had misrepresented both the costs of the school and whether class credits earned at Everest could be transferred to other […]

In the fall of 2010, three former students at Everest College, a for‐profit career school in Salt Lake City, sued their school’s parent company, Corinthian Colleges, alleging that admissions officers had misrepresented both the costs of the school and whether class credits earned at Everest could be transferred to other educational institutions.

A 13‐page affidavit filed in the case by a former admissions officer, Shayler White, described a high‐ pressure recruitment process in which prospective students were barraged by phone calls multiple times a day and hustled through financial aid paperwork. With his employment contingent on meeting a strict enrollment quota, White made as many as 600 calls a month, and was, he said, instructed by his superiors to use bullying psychological tactics, to ask questions “designed at putting down the prospective student” and “making them feel hopeless.”

“The ultimate goal was to essentially make them wallow in their grief, feel that pain of having accomplished nothing in life, and then use that pain as their ‘reasons’ to compel the leads to schedule an in‐person meeting with an Everest admissions representative.”

Representatives of Corinthian Colleges dispute White’s assertions. Kent Jenkins, Corinthian’s current vice president for public affairs, deflected a question asking if White’s account accurately represented Corinthian’s recruitment process by noting that there has been no final disposition of the Utah suit. “There have been absolutely no court rulings that support any allegations” in the affidavit, he wrote in an email. “There simply is no ‘there,’ there.”

But generally speaking, there’s little question that an obsessive focus on constantly boosting enrollment is crucial to survival in the for‐profit college world. Sky‐high withdrawal rates plague the industry. It’s not uncommon for the biggest for‐profits to enroll as many new students during the course of a single year as originally signed up for classes at the beginning of the year, a phenomenon referred to as “enrollment churn.” For example, Corinthian had 71,246 students in July 2008, enrolled 120,638 new students during the following year, but ended up with only 89,479 by June 30, 2009. Recruiting all those new bodies costs a lot of money. In 2009, Corinthian spent almost a quarter of its $1.3 billion in revenues on advertising and recruitment.

“They are, by and large, a marketing operation,” Sen. Dick Durbin, D‐Ill., said in a speech on the Senate floor last September. “Bring the students in, sign them up, bring in the federal dollars; bring in more students, sign them up, bring in more federal dollars.”

Corinthian Colleges, in that respect, is no different from any other career school. But in an industry where bottom‐line considerations often trump devotion to educational achievement, Corinthian invites scrutiny. Over the course of its 17‐year history, the company has attracted numerous lawsuits. Corinthian schools have recorded some of the highest default rates on student loans in the country, a worrisome fact for a company that derives nearly 90 percent of its revenues from government loans and grants. If you want to understand why the Obama administration has been so steadfast in its efforts to crack down on the for‐profit industry, Corinthian is as good a place as any to start.

Founded in Irvine, Calif., in 1995 by five veterans of the vocational school business, Corinthian’s strategy from the beginning was to purchase already existing schools and aggressively boost enrollment. The business plan was simple: grow, grow, grow. By 1998, Corinthian was ready for a public offering. Today, Corinthian is the fourth largest for‐profit college in the U.S., with 97,000 students at 122 campuses distributed between the U.S. and Canada. At least half those students, says Jenkins, are enrolled in classes aimed at securing low‐level jobs in the healthcare industry. In 2011, Corinthian recorded $1.9 billion in revenue.

Corinthian generates almost as much bad press as profit. In 2004 former students filed three separate lawsuits in Florida alleging credit transfer fraud, claiming that Corinthian misled students as to whether

their credits would be accepted by other educational institutions. In 2005, Corinthian paid the Department of Education $776,241 for violations of student aid procedures at California’s Bryman College. In 2007, reported the O.C. Register, Corinthian paid the state of California $6.5 million to settle charges of false advertising relating to allegedly overstating “the percentage of its students who obtained employment via its courses.” Just three weeks ago, Corinthian revealed in a regulatory filing that the Consumer Financial Protection Bureau is investigating the company to “determine whether for‐ profit postsecondary companies, student loan origination and servicing providers, or other unnamed persons, have engaged or are engaging in unlawful acts or practices relating to the advertising, marketing or origination of private student loans.”

But perhaps the most embarrassing twist in Corinthian’s recent history came earlier this year in California. In 2012, a new state law came into effect that denied colleges access to the state’s Cal Grants financial aid program if the three‐year student loan default rate at an institution exceeded 24.6 percent. Of the state’s 165 for‐profit schools, 67 failed the test. Eighteen of those 67 schools are owned by Corinthian. In fact, some of Corinthian’s schools exhibited default rates of over 40 percent. None of California’s public schools failed.

Corinthian’s Jenkins acknowledged that in the past, Corinthian Colleges has had a problem with student loan default rates. But he said that in the last two years, Corinthian had addressed the problem, and rapidly brought down default rates across the entire Corinthian network from 21 percent to “6 or 7 percent.”

Lauren Asher, president of the higher education research and advocacy think tank the Institute for College Access and Success, questioned whether Corinthian’s sharp drop in default rates actually served the interests of students. She pointed to a May 3 conference call Corinthian held with investors, in which company executives acknowledged that much of the improvement resulted from “deferment and forbearance. “In other words, Corinthian students were being counseled on how to delay paying back their student loans, in order to avoid defaulting during the three‐year window tracked by state and federal governments. However, the interest rates charged on student loans mean that the longer you wait to start repayment, the higher your debt load eventually becomes. According to U.S. Education Department data analyzed by Higher Education Watch, almost 75 percent of Corinthian students who had left their school within the previous four years had yet to pay down their student debt by a single dollar.

Corinthian’s record on private sector student loan defaults is even worse, a fact that may explain why the CFPB has launched an investigation of the company. At Corinthian schools, students have been defaulting on private loans made directly by Corinthian itself to its own students — so‐called institutional loans — at rates exceeding 50 percent.

And therein lies an interesting story. Government regulations limit for‐profit schools from getting more than 90 percent of their revenue from government loans. The rationale is simple, as the Project for Student Debt observes: “If no one else is willing to pay for it, taxpayers should not be either.” The rule was a response to the surging growth in the late 1980s of fly‐by‐night for‐profits established solely to grab government loan money, and the original ratio was 85/15. Lobbying by the for‐profit sector during

the Bush administration (when the Department of Education was packed with for‐profit veterans) weakened the standard to 90/10, but even that is still too strict for Corinthian executives, who have regularly complained about the rule in congressional testimony.

Complaints notwithstanding, Corinthian and other for‐profit schools quickly found a way around the 90/10 restriction by bundling private student loans along with government aid in their financial aid packages for students. Private loans, usually offered by banks or Sallie Mae, a corporation that specializes in originating and servicing student loans, don’t count against the 90 percent. So for every dollar in private student loan aid granted to a student attending a for‐profit school, $9 in public aid become available.

In the aftermath of the financial crisis, however, providers of private student loans exited the market, unable to afford the high default rates during a recessionary economy. In response, Corinthian and its for‐profit colleagues lobbied Congress to pass a provision that allowed “institutional loans” made by the schools themselves to count toward the 10 percent part of the 90/10 rule. By 2010, Corinthian was lending its own students about $150 million a year.

For Corinthian, a 50 or even 60 percent default rate was acceptable precisely because the institutional loans make it possible to continue to access government funding. Even if Corinthian had to write off half of its annual disbursement of $150 million, the company more than made up for that loss in the revenue generated by government loans. As Sen. Durbin explained on the Senate floor last September: “The company is willing to take this loss of $75 million in private student loan defaults because these loans help ensure the federal loans and Pell grants will keep coming in to these students, despite the fact they are in over their head in debt and have nowhere to turn.”

Education activists like Asher point out that while the default rates don’t hurt the bottom lines of the colleges, they are an ongoing disaster for students. The federal government has set up numerous ways to delay repayment of student loans or link payment rates to annual income. The private sector is less forgiving. A change in bankruptcy laws in 2005 ensured that private student loans, for example, cannot be discharged in bankruptcy.

Kent Jenkins defended Corinthian’s institutional loan program with a refrain often heard from defenders of for‐profit schools. Students at Corinthian, he noted, tend to have extremely low incomes, “did not thrive in traditional academia and are out on their own financially.” They have few options. Corinthian, he said, trains these students for real‐world jobs.

“The education that our students get is economically beneficial to them,” said Jenkins, “and that is the way it should work.”

Jenkins acknowledged that dropout rates in the for‐profit sector can be high, but said the proper comparison for Corinthian, where most courses are under two years in length, is with two‐year community colleges.

“We enroll a larger percentage of students that are high risk and minority,” said Jenkins, “and we have a significantly higher graduation rate than community colleges do.”

Corinthian’s exact graduate rate numbers are in dispute. According to a report released by the Senate’s Health Education Labor and Pensions Committee, chaired by Sen. Tom Harkin, D‐Iowa, Corinthian schools have some of the worst withdrawal rates in the entire for‐profit sector. Using data that Harkin’s office asserted came directly from Corinthian, the Harkin report determined that 66 percent of Corinthian students who were enrolled in 2008‐09 withdrew without graduating with an associate’s degree by 2010, ranking Corinthian the fourth worst performer in the for‐profit sector over that time period.

But even the Harkin report acknowledges that the completion rate data provided by publicly traded for‐ profit companies only accounts for first‐time, full‐time students, and doesn’t include transfers or part‐ time students. And many of Corinthian’s courses aren’t designed to lead to associate degrees. A typical student might be enrolled in an eight‐month “medical assistant” program. It’s unclear where such courses show up in the statistics; according to Jenkins, the withdrawal numbers promulgated in Harkin’s report do not include those students. According to Jenkins, during the time period studied by the Harkin team, 45,000 students graduated, and only 30 percent withdrew.

“The 66.5 percent number alleged by the HELP Committee is not only wrong, it has no apparent basis in fact,” said Jenkins via e‐mail.

Critics of for‐profit schools do concede that graduation rates for the sector as a whole are better than for community colleges. But they argue that doesn’t mean that “outcomes” are better. Community college students tend to borrow much less from the government to pay for their education. (For‐profit schools are estimated to cost five times as much as community colleges. The Harkin investigation, reported Bloomberg, found that “an associate’s degree in business from Corinthian’s Everest College in Florida costs $46,792, compared with about $6,453 for the same degree from Miami Dade College.”) Meanwhile, nearly all for‐profit students borrow to pay for most of their education. Which raises the question, are you really better off graduating from a for‐profit school if you end up carrying so much debt that you are almost bound to default?

At a hearing discussing the financial outcomes of students at for‐profit colleges held by the Senate Committee on Health, Education, Labor and Pensions last June, Deborah Abernathy, a vice president at the the Institute for College Access and Success, testified that there is evidence that “completers at career colleges were much more likely to be in default than students who dropped out of public and nonprofit colleges. A study by three MIT researchers published in December 2011 summed up the following conclusions from the available data.

We find that relative to these other institutions, for‐profits educate a larger fraction of minority, disadvantaged, and older students, and they have greater success at retaining students in their first year and getting them to complete short programs at the certificate and associate degree levels. But we also find that for‐profit students end up with higher unemployment and “idleness” rates and lower earnings six years after entering programs than do comparable students from other schools, and that they have far greater student debt burdens and default rates on their student loans.

The high costs, withdrawal and student loan default rates all help explain why the Obama administration pushed last year to institute new “gainful employment” rules that would require for‐profit schools to prove that acceptable percentages of their graduates were paying down their debt after graduation. However, even those rules were extremely watered down, say higher education watchers, after extraordinary lobbying efforts from the for‐profit sector, including Corinthian Colleges. That’s right: Corinthian spent money generated from taxpayer‐funded student loans to pay for lobbying efforts aimed to weaken rules designed to ensure that students get a good education and taxpayers get their money’s worth. If that doesn’t send you screaming to your nearest publicly funded community college, nothing will.